US $ 347 million for the start of production of Hengchi 5

Evergrande is sticking to the start of production of Hengchi 5. For this purpose, Evergrande Auto will be supplied with fresh capital amounting to US $ 347 million via the stock exchange. For this, the company is issuing 900 million new shares. In addition, the group has parted with another European subsidiary. The result was a small contribution to the company's coffers and a deal that couldn't be healthy at all.

Evergrande (NEVS) Tianjin plant. Photo credit: Reuters
Evergrande (NEVS) Tianjin plant. Photo credit: Reuters

US $ 347 million for the start of production

The start of production of Hengchi 5 is scheduled for January. According to Chinese sources, the pilot series should already be produced at the NEVS plant in Tianjin. But the capital requirement remains enormous, a few US $ 100 million is not too much for that. In order to fill Evergrande Auto's (presumably) empty coffers, the company is concerned yet again fresh money on the stock market.

Evergrande Auto (HK 0708) placed for it  900 million new shares with a discount of 15% on the closing price on Friday. The market welcomed the development and the hope of an early start of production. At times the share was quoted with a plus of more than 11%.

But the group itself is still in bad shape. Evergrande, once a Fortune 500 company, will soon be ranked in the Hang Seng Enterprise Index (.HSCE) verlieren. Founder Hui Ka Yan has parted with private assets in the billions and, as publicly warned, put the proceeds into debt repayment. As a result, Hui Ka Yan only ranks 70th among the richest Chinese.

Company sales with high losses

In addition, everything is done to reduce costs and parted with other European investments. It goes without saying that these businesses are anything but healthy. Evergrande recently sold e-Traction Europe BV to Saietta Group. A little more than € 2 million came into the account, the acquisition cost more than € 70 million in 2019.

Evergrande accepts high losses, with NEVS remaining with the Chinese as the last European investment. It remains to be seen whether it will stay that way in the long term. It is emphasized again and again how important the company is to the realization of the e-car plans. The further fate could depend on whether Hengchi 5 will really start in the direction of series production in January.

3 thoughts on "US $ 347 million for the start of production of Hengchi 5"

  • blank

    Seems to be going ahead. I guess you will want to keep NEVS as a test and development center (maybe also for design). Cars will no longer be built in Sweden, the country is too expensive for that and China is unbeatably inexpensive.

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  • blank

    Well, you can buy the services of e-traction if you need them. But there is one line more on the list of sales to be made to the CCP.
    Trollhättan may be needed as a bridgehead in the EU. ... even if the Hengchi 5 only completes its crash tests for Europe on the former SAAB test site (and looks good doing it) that would throw a bit of shine on the Hengchi from SAAB's core competence.

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    • blank

      I would love to believe that too.

      I'm afraid this has little to do with Saab's old virtues. The virtues have not been honored in Europe or the USA. In China they are practically unknown ...

      In addition, they are statute-barred worldwide. No, there must be another interest Evergrande has in NEVS. Perhaps it is so banal that without NEVS you would not have sufficient production capacities (state licenses)?

      Answer

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